Improving transaction success rate in cryptocurrency payment channel networks

Abstract Blockchain-based cryptocurrencies has received a substantial interest in the last decade as Blockchain can ensure trust among users without relying on third parties. However, cryptocurrency adoption for micro-payments has been limited due to slow confirmation of transactions and unforeseeable high fees, especially in the case of Bitcoin. To this end, creating off-chain payment channels between users is proposed which enables instant and nearly free transactions without writing to blockchain. Off-chain channel idea is then extended to establish payment channel networks to scale the idea to allow payment routing among many users. However, due to the way these channels are designed, both sides of a channel have a fixed one-way capacity for making transactions. Consequently, if one side consumes the whole one-way capacity, the channel becomes non-transitive in that particular direction, which causes failures of payments that would like to pass through. Eventually, the network becomes partitioned with unevenly distributed funds. In this paper, we propose the adoption of three specific techniques that aim to increase the overall success rate of payments and address channel imbalance problem to keep the payment channel network sustainable in the long run. First, we show the effectiveness of balance-aware routing that better utilizes available funds in the channels. Second, we propose an efficient method for selection of the gateway (i.e., connection point) for a user by considering the gateway’s inbound and outbound capacity. It exploits the fact that end-users can connect the network through multiple gateways any of which can be used to initiate the payment. Finally, we propose proportional payment splitting method to further increase success rate especially for large transactions. We implemented the three approaches for assessing their effectiveness. Compared to existing approaches such as maximum flow or greedy, the proposed approaches can achieve much higher success rates with channels balanced better.